Hong Kong faces wider fiscal deficit next year

Hong Kong's fiscal deficit next year could be larger than the expected HK$7.5 billion ($967 million) in the current 2008-09 period, a local newspaper on Sunday quoted Financial Secretary John Tsang as saying.

Hong Kong's fiscal deficit for 2009-2010 will widen due to an expected drop in income, at a time when the government plans to maintain spending levels, the South China Morning Post quoted Tsang as telling a public forum.

Tsang said the fiscal deficit will be close to the government's original estimate of about HK$7.5 billion for the current fiscal year ending in March, according to the newspaper.

No specific forecasts were provided.

Hong Kong posted a HK$30.9 billion fiscal surplus for the April-December period, but government finances are expected to have deteriorated in the final three months of the fiscal year.

Accountacy firm PricewaterhouseCoopers last month projected the government would post a fiscal deficit of HK$50 billion in the current year, which will rise to HK$60 billion in 2009-10 and HK$85 billion in 2010-11.

Hong Kong tipped into recession in the third quarter of 2008 as its open economy, which relies heavily on trade and finance, is being hit hard by the global economic downturn.

The recession is expected to reduce tax revenue at a time when the government has announced a series of measures to help the territory, including facilitating loans to small businesses and guaranteeing bank deposits for two years.

HONG KONG, Feb 8 (Reuters) -